The Governor of the Bank of Ghana, Dr Ernest Addison, has said the introduction of the electronic version of the E-cedi will help bridge the gap between the banked and unbanked in the country.
He said when fully implemented, the E-cedi would have products and services that would make that happen.
Since 2019 when Libra (a digital currency backed by Facebook) was unveiled, there has been a deliberate effort by several central banks to explore the option of digital currency, commonly known as the Central Bank Digital Currency (CBDC).
In June 2021, the Bank of Ghana announced the development of its CBDC known as the E-Cedi. The pilot stage of the E-Cedi began in September 2021.
In a speech that was read on his behalf at the opening of a regional course on Currency Management and Forecasting organised by the West African Institute for Financial and Economic Management (WAIFEM), Dr Addison said the E-cedi would help increase cross-border trade, accelerate financial inclusion, and offer cheaper and faster remittance inflows.
He said it would also help in targeted social interventions, as well as improvements in monetary policy effectiveness, payment systems efficiency and tax collection.
“The E-Cedi will serve as both a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments,” he stated.
Currency management
Dr Addison noted that effective currency management depended on excellent information and insightful analysis.
He said efficient and effective currency management commenced with a strategic analysis of the currency life cycle, adding that strategic management of currency was impossible without accurate forecasts of the demand for banknotes.
“The long lead time involved in banknote production makes it vital from a cost and reputational point of view that central banks forecast the demand for banknotes as accurately as possible. Indeed, the benefits of accurate forecasting are obvious. It encourages more efficient procurement and reduces stockholding costs,” he stated.
He said a disciplined, balanced approach to currency management reduced opportunity losses and thus enhanced the smooth functioning of the banking system.
He urged central banks to also safeguard the value of the currency through various measures such as initiating policies relating to the issue and redemption of currency, initiatives to prevent and minimise money laundering and counterfeiting, and adequately meeting the demand for money by the public.
Clear indicators
In his opening remarks, the Director General of WAIFEM, Dr Baba Y. Musa, said the integrity of a currency and its efficient supply were clear indicators of a well-functioning central bank.
He said due to the sensitive nature and relevance of that fundamental function, central banks must be effective and efficient, and present no issues that may hurt the reputation of a country’s financial system.
He said of particular concern was the issue of counterfeiting, which was as old as money itself, and continues to pose a significant threat to financial systems.
“Generally, effort towards protecting currencies from counterfeiters has increasingly become more dependent on cooperation/collaboration among law enforcement agencies, financial institutions and central banks, the security printing industry and the high-grade supplier’s community.”
“Cooperation/ collaboration bridges geographic, jurisdictional, cultural and organisational divisions, which were once impediments to providing comprehensive and co-coordinated solutions for combating modern financial crimes,” he stated.
Dr Musa also added that in recent times, the issue of how central banks could leverage emerging technology in the digital space to enhance the efficiency of the payments system with its potential benefits on the macroeconomic and financial stability had been studied under the introduction of the CBDC.“These issues will be covered in detail during the five-day workshop and I am certain that participants will benefit from the discussions,” he noted.